(SNews) – In a major wake-up call for Democrat President Joe Biden and VP Kamala Harris, a huge bank that was a dominant player in the tech industry has collapsed.
The failed Silicon Valley Bank has now been taken over by the Federal Deposit Insurance Corporation (FDIC).
This is not just any bank failure, however, and it could lead to major issues across the country.
Celebrated entrepreneur Brad Hargreaves broke it down: “CEOs yesterday faced a hard choice: Pull your deposits and go into default on your venture debt or risk losing everything if the bank failed.
“Many chose to hold tight as SVB’s outright failure seemed outlandish.
“Now they may not be able to make payroll next week.
“Unpaid wages pierce the corporate veil, so boards are *incredibly* sensitive to employing workers they may not be able to pay Expect mass layoffs later today, Monday at latest.”
Having run a startup through the GFC, this is the first thing I've seen since that is even vaguely reminiscent of that time. Total clusterfuck.
— Brad Hargreaves (@bhargreaves) March 10, 2023
Appears that SVB has been closed.
The FDIC link says uninsured depositors (with over $250k?) get a receivership certificate for their uninsured funds.
If I’m reading this right, that means any entity that still has money on SVB now has to go through a bankruptcy claims-like… https://t.co/G7wopzMQBg pic.twitter.com/0oQXq384hg
— Balaji (@balajis) March 10, 2023
“To protect insured depositors, the FDIC created the Deposit Insurance National Bank of Santa Clara (DINB). At the time of closing, the FDIC as receiver immediately transferred to the DINB all insured deposits of Silicon Valley Bank.
“All insured depositors will have full access to their insured deposits no later than Monday morning, March 13, 2023.
“The FDIC will pay uninsured depositors an advance dividend within the next week.
“Uninsured depositors will receive a receivership certificate for the remaining amount of their uninsured funds.
“As the FDIC sells the assets of Silicon Valley Bank, future dividend payments may be made to uninsured depositors.
“Silicon Valley Bank had 17 branches in California and Massachusetts.
“The main office and all branches of Silicon Valley Bank will reopen on Monday, March 13, 2023. The DINB will maintain Silicon Valley Bank’s normal business hours.
“Banking activities will resume no later than Monday, March 13, including online banking and other services.
“Silicon Valley Bank’s official checks will continue to clear. Under the Federal Deposit Insurance Act, the FDIC may create a DINB to ensure that customers have continued access to their insured funds.
“As of December 31, 2022, Silicon Valley Bank had approximately $209.0 billion in total assets and about $175.4 billion in total deposits.
“At the time of closing, the amount of deposits in excess of the insurance limits was undetermined.
“The amount of uninsured deposits will be determined once the FDIC obtains additional information from the bank and customers.
“Customers with accounts in excess of $250,000 should contact the FDIC toll-free at 1-866-799-0959.
“The FDIC as receiver will retain all the assets from Silicon Valley Bank for later disposition. Loan customers should continue to make their payments as usual,” the FDIC said.